Raising the second fund has been easier in a number of ways. First of all, we have certainly seen a higher interest and appetite for the asset class as such, as even more conservative investors are anticipating strong returns in the sector. Moreover, we have been able to show that our investment strategy and our focus on transformative technology companies across a breadth of different sectors in B2B is playing out and is reflecting in a strong portfolio performance.

While historical track record remains the most important measure when evaluating a GP, its ability to generate consistent returns in the future is what matters ultimately.

While historical track record remains the most important measure when evaluating a GP, its ability to generate consistent returns in the future is what matters ultimately. In our views, performance is generated by investment teams that can work successfully over the long term. We aim to support the right team, with an appropriate fund size and a clear strategy to execute on. People are at the very center of our analysis and given the long term relationships that we aim to build, we like to see consistency in the core team complemented by a well-defined succession plan for the younger generation of up and coming investors.

Our positive view on the European VC landscape has been reinforced in recent years as we witnessed the emergence of a growing number of start-ups led by experienced entrepreneurs able to scale their business internationally. This is now confirmed from many angles by increased capital inflows and deal activity.

Sofina has been an investor in VC funds for more than 30 years. We remained focused on the leading US GPs for most of this period because the European venture ecosystem did not produce enough successful venture-backed companies despite the abundance of well-educated entrepreneurial talent. We were hoping for improvement and began to see the tide turning about five or six years ago. We invested in a selection of the best European VC firms where we found investment talent and processes comparable to our US benchmarks.

Our positive view on the European VC landscape has been reinforced in recent years as we witnessed the emergence of a growing number of start-ups led by experienced entrepreneurs able to scale their business internationally. This is now confirmed from many angles by increased capital inflows and deal activity. The size of financing rounds is growing and valuations are following the global rising trend. We also see more engagement from communities to support technology and innovation. It helps make start-up careers more visible and more attractive for young talented professionals. Another significant development is the renewed interest of leading US VC investors who are raising their game in Europe and building local teams to support their investment activity. Competition is heating up and the pandemic did not materially change the picture. We know that the VC industry will face cycles but we are confident in its long-term positive trend.

The development of Covid-19 has also demonstrated the resilience and overall belief in the market, and its attractiveness for investors as a long-term investment opportunity.

The European market has matured considerably over the past years. The region today has several leading global VCs but a new generation of funds have also sprung to life, also thanks to a larger pool of former entrepreneurs. Ecosystems have therefore multiplied in depth and across geographies and selection wise, LPs are today met with a much higher level of sophistication. As the overall ecosystem has developed, GPs have also become bolder and held on to companies much longer and by doing so, they have supported founders longer throughout their journey – leading to great outcomes for all parties involved. The development of Covid-19 has also demonstrated the resilience and overall belief in the market, and its attractiveness for investors as a long-term investment opportunity.